4 min
The U.S. population is aging rapidly. One in 6 people were 65 or older in 2020, according to the Census Bureau. In 1920, less than 1 in 20 people were that age.
Baby boomers—the generation born between 1946 and 1964—began turning 65 in 2011. Today, more than 10,000 people reach that milestone every day. Because of their sheer numbers, boomers have expanded the ranks of older Americans by nearly 40 percent over the last decade. That compares to about 7 percent growth over the last 10 years when all ages in the US population are included.
This demographic change is having a profound effect on the labor market. The Bureau of Labor Statistics estimates that total employment in the U.S. will grow by just 0.4 percent annually over the next 10 years, just a fraction of the 1.3 percent annual growth recorded the previous decade.
This slowdown in employment growth, combined with the expanding ranks of retirees, has implications for the entire economy.
An aging population changes consumption patterns and forces the economy to divert more resources to health care. Government deficit spending rises as Social Security and Medicare spending increase. And an older population could lead to higher inflation if there are too few workers to provide the goods and services the economy demands.
The United States isn’t the only country going gray. Globally, the number of people 65 and older is projected to double from 2021 to 2050, according to United Nations estimates. In Europe, this change is happening now; people 65 and older will outnumber people younger than 20 by 2030.
Other wealthy economies share the same demographic fate. China, Australia, Japan and Canada all will see a jump in their older populations over the next decade.
Africa and Southeast Asia stand apart. Between 2020 to 2050, both will see a big increase in the number of workers between 15 and 24. The U.N. estimates that Africa will account for almost three-fourths of this growth.
What’s next?
This week, ADP Research and American Public Media’s Marketplace partner on a four-part series, the “Age of Work”. While rapid-fire advances in artificial intelligence have captured the public imagination and Wall Street’s investment dollars, fast-moving global demographic change promises to be potentially more transformative to the world economy.
We kick off the program at a U.S. epicenter of the age transition, Cumberland County Tennessee. The median age of people employed in Cumberland County is 47, according to ADP payroll data, compared to the national median of 40. And 45 percent of Cumberland’s residents are 65 and older, compared to 27 percent of the U.S. population according to the US Census.
These numbers are far from the whole story. Cumberland County’s aging has been turbocharged not by local residents, but by seniors arriving from Chicago, New York, New Jersey, California, and Florida in search of a lower cost of living and an active retirement.
These transplants are not only older than the local population, they also tend to be wealthier. This has a big effect on house prices, wages, economic growth, and the availability of social and health services in the once-rural county.
When a local economy repositions to serve an influx of retirees, tensions arise. Cumberland’s experience might carry a message for the country as a whole.
Join ADP Research and Marketplace this week as we meet the people behind the data.
The week ahead
Monday: “Age of Work” airs in four parts beginning today. Join Marketplace host Kai Ryssdal and me as we get to know the folks in Cumberland County this week.
Tuesday: Don’t miss December’s durable goods report from the Census Bureau and the S&P CoreLogic Case- Shiller Home Price Index for November. Both measures will give an early look at how pinched consumers and homebuyers might be this year when it comes to furniture, appliances, houses, and other big-ticket items. The question I’m asking is have interest rates come down enough to support consumer spending on high-priced items?
Wednesday: Federal Reserve policymakers deliver their first rate decision of the year. Markets will be watching for evidence of whether the Fed intends to hold the line or embark on bigger rate moves. The data-driven Fed will have to make its decision without the benefit of economic releases coming Thursday and Friday.
Thursday: Bureau of Economic Analysis first look at fourth-quarter GDP is expected to be lower than the previous quarter, but consensus estimates put it at a still-solid 2.5 percent.
Friday: The week ends with a package of inflation-related data, starting with the Fed’s preferred measure, the Personal Consumption Expenditures Index, or PCE, which will show if income growth is outpacing price growth or falling behind. Also important is a fresh read on labor costs. The BLS fourth-quarter Employment Cost Index is likely to show what ADP’s Pay Insights has been measuring in real time: Labor costs are slowing, but remain elevated.
